Question

From the given information, calculate the following:
(i) Cost of Revenue from Operations
(ii) Opening and Closing Inventory
(iii) Quick Assets
(iv) Current Assets
information:
Inventory Turnover Ratio 6 times, Inventory at the end is Rs. 6,000 more than the inventory in the beginning, Revenue from Operations (all credits) Rs. 2,40,000, Gross profit 25% on cost, Current Liabilities Rs. 80,000, Quick Ratio 0.80 : 1.

Answer 1

(i) Let the cost = Rs. 100
Gross profit = Rs. 25
Revenue from Operation (Sales) = Rs. 100 + Rs. 25 = Rs. 125
Revenue from Operation (all credit) = Rs. 2,40,000 (Given)
`therefore` Cost of Revenue from Operations = Rs. 2,40,000 `xx` Rs. 100/Rs. 125 = Rs. 1,92,000.
(ii) Let Opening Inventory = x
Closing Inventory will be = x + Rs. 6,000
Average Inventory = `("Opening Inventory + Closing Inventory")/(2)`
`= (x + x + Rs. 6,000)/(2)`
Inventory Turnover Ratio = `("Cost of Revenue from Operations")/("Average Inventory")`
`6 = (Rs. 1,92,000)/((x+x+ Rs. 6,000)/(2))`
6x + 6x + Rs. 36,000 = Rs. 3,84,000
12x = Rs. 3,84,000 - Rs. 36,000
12x = Rs. 3,48,000
x = Rs. 3,48,000/12 = Rs. 29,000 (Operating Inventory)
Closing Inventory = Rs. 29,000 + Rs. 6,000 = Rs. 35,000.
(iii) Quick Assets = Rs. 80,000 (CL) `xx` 0.80 = Rs. 64,000.
(iv) Current Assets = Quick Assets + Inventory (Stock)
= Rs. 64,000 + Rs. 35,000 = Rs. 99,000.